MADISON, Wis.-Credit Union Journal asked four economists for their advice to credit unions:
Bill Hampel, CUNA chief economist: "There is nothing dramatic credit unions should do in the short run. They need to stay pretty liquid and be prepared to talk to members who are concerned and call for advice on what to do. More harm can be done by action than inaction in situations like this. If people make dramatic decisions based on short-term fluctuations in the financial markets they often end up regretting those decisions."
Tun Wai, NAFCU chief economist: "I continue hearing from credit unions that they cannot lay off their existing deposits because there are not many qualified borrowers coming in the door. Credit unions need to be careful because you do not want to make a bad loan and have it come back and bite you two years later. You have to be prudent in times like these."
Dave Colby, CUNA Mutual Group chief economist: "Seek out members who have good, solid equity positions in their houses and rewrite their loans, keeping as short a duration as possible. For vehicle loans, get out there and aggressively pursue the used vehicle market. You are jousting at windmills if you think you will get a lot of new vehicle loans when you are competing against 0%."
Mike Moebs, economist and CEO of Moebs Services: "The major thing CUs must to do in light of the downgrade and the fact their capital-to-asset ratio keeps falling because they can't stop the inflow of deposits and can't lend effectively, is cut expenses. The community banks are six months ahead of them here. We are talking about employees, as well. Credit unions need to be at one employee for every $6 million in deposits. Many are hovering at one employee for every $2 to $3 million in deposits."
